Global Macro Update

My guest this episode sees several things simmering beneath the surface that suggest the economy may not be as weak as many believe. When inflation spiked last year, companies responded by raising their prices. As price pressures started to ease, companies opted to prioritize pricing over volume. The move made perfect sense, says Samuel Rines, Managing Director at Corbu, LLC, as pricing helped maintain margins. It’s a strategy he has dubbed “price and margin” (PAM). And as input costs retreated and prices stayed steady, the money fell to the bottom line. It’s one of the things that kept him bullish in the face of widespread bearishness early this year.

Trust in elected officials has been in steady decline for decades. It’s hard to decide if members of Congress and other elected officials are self-serving or civil servants. One thing is certain—many are getting richer while in office. They are investing based on insider knowledge. If you or I did that, we’d go to jail. If you are in Congress, it’s perfectly legal. Matt K. Lewis just released a book on this topic, and he pulls no punches. Filthy Rich Politicians explains just how badly our system is broken and which politicians are the most egregious when it comes to lining their pockets. 

Socially responsible investing hasn’t changed anything while handing investors subpar returns. The envisioned benefits of ESG investing—owning companies that follow responsible environmental, social, and governance policies—have failed to materialize. Instead, the blind acceptance of ESG precepts has resulted in trillions of dollars being misallocated and zero progress toward its principle target: climate change. Terrence Keeley, author of Sustainable: Moving Beyond ESG to Impact Investing, shows how ESG got the ideology right and the methodology wrong.

If you listen to the financial media, you’d think seven stocks are responsible for “the market’s” gain this year. But the charts are telling us otherwise. Almost every sector is up double digits since last June. To understand what’s happening in the markets, this week we connect with market technician JC Parets. JC is the founder and chief analyst at All Star Charts. The company offers daily market commentary and a technical analysis platform for research and options trading. He is seeing the continuation of a healthy sector rotation that started last year when value rallied. He has charts and comments on several stocks, commodities, and sectors.

The cost of college has risen so much that more than half of Americans no longer think a college education is “worth it.” We have reached the point where the cost of a four-year degree will likely be the second-largest expenditure in your lifetime, second only to your house. Students are literally mortgaging their futures to pay for college. What happens next for higher education, and how should prospective students and their parents weigh their options? These are the topics of this week’s Global Macro Update. Economist Dr. Gary Shilling joins us with his thoughts on the cost of higher education and alternatives to the college track.

Artificial intelligence (AI) is the lifeblood of the technologies driving today’s global disruptions. And 2023 is the year that AI has been catapulted from novel idea to appearing on everyone’s radar. The AI narratives span from the promise of a George Jetson future to fears of a dystopian takeover by AI-empowered robots—and everything in between. To sort this all out, I talked with AI expert Stephen McBride for his take on where we are today, and how to spot the industries and occupations that will be most affected.

The world is not going to return to its pre-pandemic business as usual. Instead, we are currently in a transition phase that few understand. That’s why I asked Bruce Mehlman, partner at Mehlman Consulting, to join me on Global Macro Update to talk about what the new normal will look like. Bruce says we face four main challenges—what he calls The Four Addictions—as we navigate a period of tough domestic choices and geopolitical realignments. He explains what they are and how they are inextricably linked.

The debt ceiling  has been dumbed-down to a political debate of right vs. left. But the ramifications of the debt standoff are already being felt in the debt markets, and it’s costing us billions of dollars. In this episode of Global Macro Update, I talk with David Kotok, Chairman and Chief Investment Officer at Cumberland Advisors. We discuss the costs of brinkmanship, the risks posed to money market funds, the geopolitical side effects, and where he sees bargains in the bond market.

The Fed seems determined to crush demand and slow inflation. And it’s having an impact on more than just banks and the housing market. The office market is also struggling with spiking interest rates and scarce liquidity. In this episode of Global Macro Update, I talk with Russell Ingrum and Brad Zampa, two senior partners at CBRE, a global leader in commercial real estate services and investments. We discuss the current state of the office properties market. For more top-level insights like this, I invite you to attend our live, online Strategic Investment Conference. Hear over 40 experts share their best market ideas and their warnings about the economy and geopolitics. More information is available here.

You may remember the acronym MBS from the ’07–’08 financial crisis. Michael Lewis's book and then movie, The Big Short, taught us all about how the mortgage-backed securities (MBS) market almost blew up the global financial system. Well, today, mortgage-backed securities are back in the news… In this week’s episode of Global Macro Update, Barry Habib, founder and CEO of MBS Highway, joins Ed D’Agostino to discuss the role of mortgage-backed securities in Silicon Valley Bank’s failure—and if the other shoe will drop for the rest of the banking sector. To hear more from Barry Habib, along with about 50 other financial and economic experts, click here for info on Mauldin Economics’ premier event, the Strategic Investment Conference.